{"id":1319,"date":"2020-01-18T13:28:32","date_gmt":"2020-01-18T19:28:32","guid":{"rendered":"https:\/\/battle4liberty.com\/?p=1319"},"modified":"2020-01-18T13:28:32","modified_gmt":"2020-01-18T19:28:32","slug":"the-china-us-trade-deal-phase-1","status":"publish","type":"post","link":"https:\/\/battle4liberty.com\/?p=1319","title":{"rendered":"The China-US Trade Deal: Phase 1"},"content":{"rendered":"\n<p>The US and China just signed phase 1 of a trade deal. It\nis not the colossal victory the Trump administration hoped for, but it is\ndefinite progress. Here are the major components of the deal:<\/p>\n\n\n\n<ol><li>China committed to increase purchases of US goods by $200\nbillion over the next two years, including $32 billion in agricultural\nproducts.&nbsp; <\/li><li>China agreed to step up efforts to prevent and punish the\ntheft of trade secrets. <\/li><li>China agreed to eliminate barriers that have prohibited\nUS banks and other financial-services companies from operating in China. <\/li><li>China commits not to devalue or otherwise \u201cmanipulate\u201d\nits currency in global markets.&nbsp; <\/li><li>The US cut in half the 15% tariff rate imposed on $120\nbillion of Chinese products and agreed to defer the additional 15% tariffs on\nconsumer products initially scheduled to take effect in December. <\/li><\/ol>\n\n\n\n<p>It is fair to question the agreement on four\ngrounds:&nbsp; <\/p>\n\n\n\n<ol><li>China\u2019s commitment to increase purchases is positive\nnews, although the numbers are targets without enforcement mechanisms. It&#8217;s not\nclear if the Chinese will purchase more that than they would have anyway. If\nso, the EU might challenge any \u201ctrade distortions\u201d created by the deal at the\nWTO. <\/li><li>Some important parts of the agreement lack clear\ntimetables and enforcement mechanisms. For example, it&#8217;s difficult to tell if\nand how China will address the theft of trade secrets.<\/li><li>The deal did not come without a cost. The tariffs imposed\non China has created substantial trade uncertainty. The tariffs generated US\ngovernment revenue and some US companies benefitted, but others did not.\nAmerican (and Chinese) consumers have paid higher prices as well.<\/li><li>The agreement does not address all the core issues,\nincluding China\u2019s market manipulations through its state-owned enterprises\n(SOEs).<\/li><\/ol>\n\n\n\n<p>But phase 1 represents progress. Here\u2019s why:<\/p>\n\n\n\n<ol><li>The trade problems with China did not develop overnight\nand will not be solved immediately. China&#8217;s leaders and its economy have become\naccustomed to the status quo. President Xi believes in managed (controlled)\nmarkets, not free enterprise. It&#8217;s unrealistic to expect the Chinese to embrace\ncapitalism, especially when so many academics and business leaders in the US\nand EU constantly criticize it.<\/li><li>Agreements without enforcement mechanisms allow the\nChinese to save face while acknowledging essential problems. Enforcement matters,\nbut will likely develop over time if the US is persistent.<\/li><li>China\u2019s agreement to amend some of its restrictions on\nforeign financial-service companies is real progress. It opens the doors for US\nbanks, insurers, and other companies to expand into China.<\/li><li>The US reduced the 15% tariff to 7.5%. It remains,\nsignaling that a &#8220;phase 2&#8221; deal is needed.<\/li><li>President Trump is under intense political pressure. To\ncomplete the job, he (and future presidents) need a broad bipartisan consensus\nsupporting both the negotiations and the strict measures (namely tariffs) that\nare required along the way. Instead, Democrats and US media outlets parroted in\nChina portray him as an illegitimate renegade. Beijing knows that the pressure\nwill subside if Trump is not reelected, so there is little incentive to make\nsubstantial concessions.<\/li><\/ol>\n\n\n\n<p>Kudos to President Trump for taking on the Chinese\neconomically. His predecessors talked about reform but were unwilling to take\nserious steps to achieve it. Phase 1 includes changes that would not have\noccurred without his efforts. Let\u2019s demand that he and future presidents finish\nthe job with a goal of free trade with China <em>in both directions<\/em>. &nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The US and China just signed phase 1 of a trade deal. It is not the colossal victory the Trump administration hoped for, but it is definite progress. Here are the major components of the deal: China committed to increase purchases of US goods by $200 billion over the next two years, including $32 billion [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/1319"}],"collection":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1319"}],"version-history":[{"count":1,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/1319\/revisions"}],"predecessor-version":[{"id":1320,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/1319\/revisions\/1320"}],"wp:attachment":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1319"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1319"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1319"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}